Tax Advantages

Annuities have several tax advantages as described below:

Tax-Deferred Growth

Just like an IRA or retirement plans, Annuities let you accumulate retirement assets in such a way that - until you withdraw them - they are shielded from current taxes on gains. In another word, Annuities let you invest your assets tax-deferred. The IRS will not tax you until you withdraw. However, unlike IRAs with $3,000 contribution limit for Traditional and Roth IRAs, there is no contribution limit on Annuities. That means you can invest as much as you like in an annuity and the whole amount will grow tax-deferred. This aspect is one of the features that make annuities very popular.

The chart is hypothetical and is not intended to reflect the performance of any particular investment. The results of a single investment of $100,000 in a taxable and tax-deferred investment are compared.The above chart reflects an 8% return on a variable annuity. However, it is not reflective of the following annual charges which would reduce the return: mortality and expense risk charges ranging from 1.25% to 2.20%; asset-based administrative charge of 0.15%; and average portfolio management fees and charges of 1.09%. These charges would reduce the return for the tax-deferred investments.

The chart assumes a 28% tax rate applied each year to the taxable investment. Certain taxable investments may be eligible for tax treatment as capital gains, which would cause a reduction in the tax payable.You should consider the impact of your personal investment horizon and income tax brackets, both current and anticipated, when making an investment decision as these factors may further impact the results of the comparison. Withdrawals of taxable amounts will be subject to ordinary income tax and, if taken prior to age 591/2, may be subject to a 10% IRS penalty tax. In this case, if the tax-deferred investment was withdrawn in a lump sum after 25 years and taxed at the 28% rate, the net value would be $521,090.

You can change investments in your Annuity without incuring tax consequences

As your financial goals change, you are able to move your money from one investment option to another without immediately feeling a tax burden. This is similar to your IRAs or other retirement plans - as long as the money stays within the Annuity, you will not be taxed.

You will only pay taxes when you withdraw

When you do withdraw money, you will have to pay ordinary income tax on taxable amounts. Just like an IRA, the federal government may impose an additional 10% penalty if you take money out before you are age 59 1/2.